Been trading for a few months but still get confused about when to use stop vs limit orders.
Sometimes I set what I think is right but the execution doesn’t match what I expected. Which one should I be using for different scenarios?
Stop orders turn into market orders when price hits your level. Set a stop loss at 1.2000? It’ll sell at whatever the market price is once EUR/USD drops to 1.2000 or below.
Limit orders only fill at your exact price or better. Buy limit at 1.2000 won’t execute unless you get 1.2000 or lower.
I use stops to cut losses or lock in profits when trends flip. Limits are better for entries - buying dips or selling rallies at specific prices.
Watch out though - stops can gap way past your price in volatile markets. During NFP releases, my stop at 1.1950 got filled at 1.1920 instead.
Taking profits? I go with limits since I want that exact price. Stopping losses? Stops work fine most of the time.
Stops are for protection and limits are for precision.
I use stops when I need guaranteed execution and don’t mind the exact price. This is great for cutting losses or locking in profits on a trend.
Limits are used when price is more important than timing. I’ll set buy limits below market to take advantage of pullbacks or sell limits above to capture resistance.
In essence, using stops means giving up price for speed, whereas limits mean sacrificing speed for price.
Stop losses limit losses but can slip in volatile markets. Limit orders give better prices but may not execute.
Stops turn into market orders when price hits your level. Limits only fill at your exact price or better.
I use stops to cut losses - put one below my entry so I’m out if things go south. You might get filled a few pips away from your stop in fast markets, but you’re protected.
Limits are perfect for taking profits. Set one above your long entry. It won’t fill unless price hits that exact level, so you get your target price or nothing.
Most people mix up stop losses and stop entries. Stop loss sits below current price to limit damage. Stop entry sits above to catch breakouts.
Took me forever to figure this out. Start small until it makes sense.
Most execution issues happen when you mix up order types or don’t consider market conditions. Stops hit at market price and slip during high volatility. I’ve had a stop at 1.1500 fill at 1.1485 when things moved fast. That’s normal. Limits get you exact price but won’t fill if the market doesn’t hit your level. Set a buy limit at 1.1950 when price is at 1.2000? It might never fill if support holds. Pick what matters more: guaranteed exit with slippage, or exact price with no guarantee it’ll execute.
Stop orders fill at market price limit orders fill at your price.
Limit orders wait for your exact price. Want to buy EUR/USD at 1.1950 when it’s trading at 1.2000? Set a buy limit - it’ll only fill if the price drops to 1.1950 or lower. Stop orders are different - they’re for when you need to act fast. Once price hits your level, they become market orders, so you probably won’t get your exact stop price. I see tons of traders mess this up by using stops to enter trades. Don’t chase breakouts with stop orders unless you really need that instant execution. Stick with limits for better entries.